cost of capital
DefinitionThe opportunity cost of an investment; that is, the rate of return that a company would otherwise be able to earn at the same risk level as the investment that has been selected. For example, when an investor purchases stock in a company, he/she expects to see a return on that investment. Since the individual expects to get back more than his/her initial investment, the cost of capital is equal to this return that the investor receives, or the money that the company misses out on by selling its stock.
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cost of capital is ...
... part of the Accounting and Trading subjects.
... part of the Accounting and Trading subjects.
Related Terms
required rate of return, modified internal rate of return (MIRR)
cost of capital appears in these other terms
marginal cost of capital, incremental cost of capital, weighted average cost of capital
cost of capital appears in the definitions of these other terms on BusinessDictionary.com
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